Under a regulatory framework announced Sept. 24, the Federal Reserve proposed an operational-risk capital requirement that treats stablecoin circulation as a direct capital cost for supervised issuers.
Progressive Capital Tiers for Fed-Supervised Issuers
The proposed rule establishes tiered marginal rates for baseline operational-risk capital calculations based on total circulating supply:
- 2% on the first $20 billion of payment stablecoins outstanding.
- 1.5% on the next $30 billion (from $20 billion to $50 billion).
- 1% on any amount exceeding $50 billion.
In addition to circulation-based charges, the formula adds 25% of an issuer's three-year average annual revenue from non-reserve assets. Under this structure, a bank-adjacent issuer with $1 billion in payment stablecoins outstanding and zero non-reserve revenue faces a baseline charge of $20 million, while a $10 billion supply requires $200 million in baseline capital. The rules apply to approved subsidiaries of insured state member banks and uninsured state-chartered depository institutions holding at least $10 billion in stablecoins transitioning under the GENIUS Act.
These requirements follow wider regulatory moves as the Federal Reserve proposes rules under the GENIUS Act for stablecoin oversight. The Board also outlined a separate 2% capital charge on reserve assets held in uninsured deposit claims or undercollateralized reverse repurchase agreements, distinct from 1:1 reserve backing rules.
Divergence Between Fed and OCC Regulatory Approaches
The Fed's approach contrasts sharply with the framework proposed by the Office of the Comptroller of the Currency (OCC) on March 2, whose comment period closed May 1. Instead of scaling capital requirements directly against circulating supply, the OCC framework sets an initial capital floor of $5 million during a de novo period, determining ongoing requirements through individualized supervisory assessments.
Furthermore, the OCC requires issuers under its jurisdiction to maintain an operational backstop consisting of readily available liquid assets equal to 12 months of total operating expenses. While the OCC considered variable capital tied to outstanding coins, it omitted the percentage-based formula from its final proposed text. Public comments on the Fed's proposals close 60 days after Federal Register publication.
Why It Matters
The Fed's tiering structure directly ties rapid supply expansion to substantial capital buffer obligations, effectively treating stablecoin issuance as an operational risk exposure rather than a simple deposit. By requiring substantial non-reserve capital reserves alongside strict 1:1 backing asset rules, regulators force issuers to weigh growth against ongoing compliance costs. This clear divergence between the Fed and OCC could drive regulatory arbitrage, shaping where institutional issuers choose to register their stablecoin products.
Key Takeaways
- Tiered Charges: The Fed imposes a 2% charge on the first $20B, 1.5% on the next $30B, and 1% above $50B in circulation.
- Concrete Example: A $1B stablecoin issuer faces a $20M baseline capital requirement, scaling to $200M for a $10B issuer.
- Regulatory Rift: The OCC relies on a $5M floor and a 12-month expense backstop rather than a supply-based percentage charge.
